Writing skills - IGCSE Level Example 1
Productivity is a measure of how efficiently goods and services are produced and is the single most important determinant of a country’s per capita income. Canada’s labour productivity growth has been lower than that of other leading economies for many decades, reducing its international competitiveness. Since 2011 however, Canada’s labour productivity has greatly improved and it is now the 3rd most productive of the 16 leading economies.
With reference to the data above and your knowledge of economics, assess the extent to which an increase in education and training is the best way to increase productivity. (Source : Edexcel IG May 2019)
Possible answer :
Before I get into the evaluation let me first present my basic understanding on productivity. Productivity is the rate at which output are produced using a given amount of input resources. Productivity could be many types such as labour productivity and capital productivity. As the case study focuses on the labour productivity, so let me drive you towards the issues relevant to labour productivity. Labor productivity is the amount of output a labour produces within a given period of time such as per hour or per day.
For example, a worker produces 8 chairs in day or 1 chair per hour (considering the worker is assigned to work 8 hours in a day). If the labour produces 2 chairs per hour then it is considered that the labour productivity has increase from 1 chair to 2 chairs per hour.
Increase in labour productivity causes less wastage of resources and faster production of output leading to lower cost, lower price and higher competitiveness in the domestic or foreign market. That is why increasing labour productivity is an important task for a firm or an economy.
There are many ways to increase labour productivity such as improved motivation, migration, improved working practices, providing better education and training facilities.
Let me focus on the education and training as it is part of our discussion.
Better education - if education is improved (among colleges and universities) through the use of technology and the relevant teaching methods that fulfill the requirements of the industries then it would improve the skills among people leading to be productive from the day 1. At macro level, these practices will definitely improve the productivity among the people in the country after sometimes.
Training - the other way to improve productivity is to provide training to people at work. This will cause them to be more confident to deal with their works leading to greater motivation and higher productivity as they are likely to produce more and at the same time waste less resources such as “time”.
Both of them mentioned above are beneficial to improve the productivity as workers would be more motivated due to their greater job satisfaction leading to lower staff turnover and higher productivity. On the other hand, investment in human capital through provision of better education causes quality of labour force to improve leading to higher productivity among people, which in turn leads to increase in per capita income.
However, despite of higher productivity due to the provision of better education and training, many firms and governments are unable to provide them in sufficient amount and focusing on other methods to improve either labour productivity or capital productivity. This is due to the following reasons.
Training leads to higher cost - as workers do not produce anything during the training period, so some firms consider it as a net loss. Besides, there are some other significant cost too, such as fees of the trainer and a setting up cost for the training workshop. So firms are often reluctant to provide required training.
Workers leaving - some firms do consider not giving training as workers are more likely to leave after receiving the training. This results no benefits for the firms providing training as the trained workers do not contribute in improving their productivity rather do that for other firms.
Firms are choosing automation - as training is costly and it is hard to make workers loyal after training, so firms substitute them with machines. As machines are more productive than labour and there is no need for regular training for machine, so firms chooses machines over labour. So labour productivity may not be priority any more.
Investment in human capital is costly - though better education is helpful to improve productivity but may not be a cheap option. Canadian government may need to invest billions of dollars to improve educational infrastructure. They may instead use the fund to invest in technologies which may cause greater capital productivity.
Investment in education does not cause quick improvement in labour productivity- as it takes long time to learn the skills at schools and colleges, so productivity may not be improved in very short span of time. This makes investment in education to improve skills and productivity to not being considered as a remedy to improve productivity in the short run often. This is one of the reason why Canada’s took a long time to improve its labour productivity.
Quality of training - though training causes productivity to improve but that does not mean, it will always improve productivity. It depends on the quality of the training provided. If the training is just superficial then, it may not improve the labour productivity at all.
Depends on the industry - if an industry is embracing automation more then, labour productivity may not be a factor for them, whereas, service industries would need more provision of training to improve labour productivity of its workers as it could be a real factor to improve the productivity of the industry as whole.
In conclusion, I must say that an increase in education and training is important to improve the labour productivity but it may not be the single most important factor as it is not always relevant to some industries or it may depend on the time or other factors such as migration and improved working practices etc.
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